The adoption of Artificial Intelligence (AI) by loan management companies is bringing significant changes, benefiting both businesses and borrowers. These firms are embracing AI to generate automated proposals for restructuring non-performing loans—commonly known as ‘red loans’—originating from banks. More importantly, these proposals are increasingly targeted and personalized for each client.
As highlighted during a recent conference on AI and the management of non-performing exposures (NPEs), company executives emphasized that beyond streamlining back-office operations and freeing up resources, AI allows trained personnel to enrich debtor profiles. Based on these enhanced profiles, AI enables tailored solutions without requiring constant input from software developers to create new tools.
For instance, debtors who demonstrate higher sustainability in their proposed repayment plans can receive more favorable automated restructuring offers compared to others. By incorporating numerous debtor characteristics alongside automation at scale, AI ultimately produces customized, rule-based solutions that promote fair treatment and transparency.
However, personal communication between servicers and debtors will remain crucial, especially in complex or sensitive cases, ensuring that human negotiation remains a vital component of the process.
AI is also expected to have a positive impact on property portfolio management. Property valuation, particularly for residential real estate, can be optimized by combining publicly available data with internal datasets using cloud infrastructure at massive scale. While physical inspections will continue, AI enhances the speed and reliability of appraisals for evaluators and managers alike.
Another key area is the use of AI for clustering properties based on factors such as location, potential return, demand coefficients, and market timing. With access to large volumes of data, servicers can dynamically group properties into clusters, each with its own strategy, allowing for agile and responsive portfolio management.
Finally, AI can provide predictive analytics regarding market trends, helping servicers determine the optimal time to sell properties, thereby maximizing returns.